When Tito Mboweni rises in parliament on Wednesday afternoon to present his revised budget, the normally emollient finance minister will likely replace his usual beaming smile with a grim rictus.

This, after all, in the direst economic circumstances in more than 70 years (cue the Great Depression of the 1930s as an approximate marker on the financial GPS), will be the worst budget in living memory and even before.

Carol Paton, editor at large for Business Day, probably understates matters when she describes Wednesday’s event as “a horror story”.

There is little in the nature of surprises since much of the detail has been trailed or leaked in advance, so short sellers of our currency – a normally reliable trade when betting against the rand usually pays – will not have much to work with. Last Friday, Mboweni informed Nedlac that he will pencil in a whopping 14% budget deficit, or the shortfall between revenues and expenditure before the government borrows to plug the gap. Just bear in mind that four months ago, when the main budget was tabled, it was less than half that amount at 6.8%. A collapsed economy and negative growth rate and increased health and associated pandemic expenses are the Covid-related causes.

But if you go back a decade, to just before the last financial crisis of 2008, you find that the budget deficit did not exist in 2007. There was a modest surplus of 0.3% on the back of GDP growth of 4.9%. Of course, a lot of targets were missed afterward as the government used its rainy-day fund in the years that followed to splurge on ballooning civil service wages and free university fees and the endless bailouts for state-owned zombie companies. And it borrowed to pay the bills on an ever-escalating scale. And that is before the costs of corruption were factored in.

But in the dire straits Tito has to navigate, the currents are treacherous. Not least, plugging the gap between revenue and expenditure means the borrowing costs of the state will soon outstrip all other services it provides.

Opposition finance spokesperson Geordin Hill-Lewis MP put a number (or several of them) on this cost at a press conference on Monday.

He advised that debt service costs (the interest paid on the borrowed money) was already the “fastest-growing item on the main budget before lockdown”. Now after Wednesday’s budget, “over the next three years, debt payments will outstrip the education budget [of R385bn] and will be the single biggest state expense” beside the even larger public sector wage bill of R785bn, which is spread over several departments.

And if this is not scary enough, within three years from now the debt-to-GDP ratio of 90% will mean that our debt burden will be nine-tenths of the size of the total economy, and within eight years it will be larger than all the economic activity in the country, weighing in at 113% by 2028/9.

Someone – that is, you and me and our heirs and successors, folks – will have to pay for all of this, assuming we can find the willing lenders, who are always available but in a risky neighbourhood like ours only at usurious cost.

The essential point here is that we squandered our fiscal inheritance from a decade back. And now faced with an enormous and unprecedented – in living times – financial crisis we have no firepower. Mboweni needs a bazooka, but in reality is armed with a heavily indebted pea shooter.

That is when a full-scale debt crisis arises: the country cannot meet its obligations or pay its debts, or can only do so at a ruinous price either socially (when there is no money for other services or grants) or politically (such as the ANC splitting up as it is obliged to go cap in hand to the dreaded IMF for a bailout with conditions). Or a combination of both.

But as US economic analyst Kimberley Amadeo wrote: “A sovereign debt crisis doesn’t happen overnight – there are plenty of warning signs. It usually becomes a crisis when the country’s leaders ignore these indicators for political reasons.”

She could have addressed her general remarks to our president, who recently still conjured up such phantasms as sovereign wealth funds, bullet trains and smart cities. Even last week he spoke of “silver linings” in the current economic storm clouds. Meantime, beyond shaking the mythical magical money tree to fund every persistent demand, from taxi to airline bailouts, he gives (or has) no clue about bringing our debt under control.

That is why it is striking and apt that two of the leading actors in our current economic melodrama – Mboweni and Reserve Bank governor Lesetja Kganyago – both cited the example of Argentina.

Kganyago, in a speech last week at Wits University, said: “South Africa risked following Argentina’s path where ideological conflicts and unstable macroeconomic policies produced a steady economic decline.”

Mboweni chose not a speech but his preferred medium of Twitter to post a photograph of himself with his self-described “very good friend” Martin Redrado.

Redrado is, with his film-star good looks, both literally and metaphorically, a poster boy for what happens when a desperate government runs out of money and veers completely off the pathway of economic orthodoxy and careens down the highway of state failure.

When I first arrived in Argentina as SA ambassador in late 2009 one of the first people I visited was Redrado, who held the same position there that Kganyago holds here – governor of its central bank.

The Argentina of those days was a sad story of economic decline and fall and had defaulted for the eighth time on its sovereign debt obligations, blamed the IMF for its own failings, and refused to cut its spending cloth to meet its reduced circumstances. The voters of the Peronist governing party were to be bought off with subsidies and handouts, and the results were runaway inflation and deep suspicion by the workers of the very banking system itself, always fearful as savers were that the government would seize their savings and pensions as it had indeed done.

And Redrado was the man on the bridge who took his duties as central bank governor seriously and stood independently from the freewheeling populism and spendthrift ways of President Cristina Fernandez de Kirchner (now back in office as vice-president).

At our meeting, I was dazzled by Redrado’s hugely impressive grasp of economics, as well as his honest assessment of his country’s strengths and weaknesses, on which he was very candid. I thought that if such an honest public official bestrode Argentina’s central bank then fiscal sanity could still prevail. Yet within days of our get-together Redrado, in early January 2010,  was forced from office after he refused to hand over the bank’s $48bn reserves to fund Kirchner’s debt-fuelled spending splurges. He left office denouncing his president for “trampling institutions”. So maybe Mboweni tweeted his photograph of Redrado as a coded warning of what happens when core institutions get ambushed as the government runs out of options.

Argentina also offers the example of raiding pension funds to meet expenditure and debt obligations, which might be on someone’s agenda in the hierarchy of our governing party. That too does not end well as it impoverishes pensioners and destroys the credibility of the sovereign and so further ratchets up the cost of debt, which in turn makes default or the debt crisis ever more likely.

Of course, these short-term fixes are just that – quick and hopeless remedies which just delay but do not avoid the Day of Judgement. But Mboweni knows that and so in his famous January tweet he signalled the answer to the situation months before Covid-19 struck these shores.

“If you cannot affect deep structural economic reforms, then game over!”

Ramaphosa did not listen or act then. One wonders whether he will be more alert now.

Leon, a former leader of the opposition, now chairs Resolve Communications.

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